Millennials find home buying overwhelming

ATLANTA - While the majority of millennial first-time homebuyers entering the market this year believe it's a good time to buy, many report feeling overwhelmed by the process and most have not taken the first financial steps toward homeownership.

Real estate expert John Adams has some ideas on how to make the process less onerous.

Q:  John, you have said that millennials will likely make up almost 50% of all home buyers this year. That’s a good sign for the real estate market, but there seems to be a snag for some younger buyers. What’s going on?

A:  Many millennials seem ready to overcome their fears of real estate ownership. Part of that is leftover from the Great Recession. Some 70% of this group said they believe the housing market today is “fragile.”

But today’s booming economy seems to have convinced this huge demographic that buying a home is a good idea.

Q:  So what seems to be the problem?

A:  TD Bank recently surveyed more than 850 millennials (age 23-38) who are planning to buy their first home in 2020.

Here’s what they found:

1.  Ninety-one percent said they believe buying a home is a good long-term financial investment.

2.  69% said they feel obligated to buy a home given the current stage of their life. 

3.  Many also believe the market is prime for purchase – 68% said it's currently a good time to buy.

Q:  Sounds like they are ready to sign on the dotted line.

A:  Not so fast.  That same survey found a problem no one was expecting: it’s what I call “millennial angst.”

Despite their intent to buy in the next 12 months, a full 75% of millennial buyers admitted they are overwhelmed by the process.

Q:  Well, sure, the home buying process is a big deal, but exactly what seems to be the problem?

A:  It seems there are three areas of concern:

1.  FINANCES ARE A CHALLENGE:

Just 52% say they have started saving for a down payment and only 53% have reviewed their credit report. A mere third (30%) of respondents have met with a mortgage lender. Each of these steps is critical to moving forward in the homebuying process.

2.  THEY WON’T SETTLE FOR LESS:

With a majority of respondents landing in the yearly household income range of $50,000 to $100,000, 22% of millennials said steep home prices in the neighborhood where they want to live have prevented them from purchasing a home to date. A third of those (36%) said they felt those homes were overpriced.

3.  STUDENT LOAN PAIN LINGERS:

Of course, student loan debt remains a major barrier to homebuyers today. This survey found that 41% of Americans who graduated in the last 20 years said they have delayed purchasing a home because of their student loan debt.

Q:  So John, what’s the bottom line for “overwhelmed” millennials?

A:  KNOWLEDGE IS POWER!

Every prospective home buyer, regardless of age, should begin their home buying journey with a trip to their local community bank or credit union, to meet with a home loan officer.

Your savings, income, expenses, and credit report are the most important factors in your quest.